The cost of living and families

Summary

• Retired and single parent households have experienced the highest rates of ‘lived inflation’ this year because a greater share of their spending goes on essentials that have had high price rises.
• However, levels of financial difficulty are highest among single households and parents, with missed payment rates among single parents in our sample reaching as high as 18.8%.
• Financial resilience is also lower among parents, with 15% of parents surveyed saying they would be unable to pay an unexpected bill of £300.
• Parents are much more likely to be taking drastic action to reduce costs, such as skipping meals or using a food bank. More than 30% of single parents surveyed have skipped meals.

Introduction

The cost of living crisis has placed enormous and continued pressure on households in the last year, leaving many struggling to cover essential spending and resorting to extreme measures like skipping meals to get by. It is also causing significant emotional distress among many, with a quarter of consumers (26%) struggling to sleep due to worries about price rises in September 2022. 

With the overwhelming majority of consumers expressing concern about prices, the impact on the population as a whole is clearly evident. However, different types of households across the country are faced with different challenges. 

This report will explore how inflation is experienced by different types of households and how these different households are ultimately impacted by price rises. We use ONS data to estimate inflation rates for different household types and explore data from our monthly consumer insight tracker to understand the impact in reality, with a particular focus on families with children who appear to be finding the crisis more acute than other types of households.

You can access our complete library of data to understand the challenges facing consumers from our consumer data hub.

Inflation impacts household types differently

Inflation for households is currently very high and is expected to remain so for some time. However, the headline rate reflects an average across the economy as not all households will experience price rises in the same way. Our analysis of ONS data demonstrates that different household types experience different levels of ‘lived inflation’ according to their typical spending patterns. 

Single parent and retired households have experienced a particularly high ‘lived inflation’ rate compared to other family types because they spend a greater proportion of their budget on food, energy and fuel, which have had especially large price increases in recent months.

In terms of how this translates to household spending budgets, energy, fuel and food is estimated to account for nearly 30% of spending among single parent and retired households from September 2022. This drops to 25% for couples with children, 24% for single households without children and 22% for couples without kids. For all household types, the share of total spending on these goods has increased compared to a year previously. 

Our analysis of inflation and spending data clearly demonstrates that the experience of price rises differs among household types. However, this does not necessarily speak to the severity of the impact on day-to-day life among those household types. Some households may have a higher rate of ‘lived inflation’ than others, but are in a better financial position to cope with this inflation burden than others.  

We have therefore used data from our consumer insight tracker to explore how price rises have affected different household types in reality, in the form of financial problems like missed payments as well as lifestyle adjustments they have needed to make to offset rising costs. 

Families with dependent children are particularly feeling the pinch

Parents of dependent children face some challenges unique to them during this crisis, with children to feed, clothe and equip for school.  Our survey data indicates that parents may be feeling the pinch more than others amid the cost of living crisis. 

The proportion of households who have missed a housing, bill or credit payment in the last month has been high throughout 2022.However, some groups of consumers are more affected than others and parents of children under 18 were much more likely to report having missed a payment. On average, the missed payment rate was 8.2% across September and October, but the rate was 13.7% among couples with children and 18.8% among single parent households. 

Pensioners were by far the least likely to have missed a payment, whilst working age adults without children were between the two.  However, single parents, single pensioners and single working age adults without children were in each case more likely to have missed a payment than their married or cohabiting counterparts. Though missed payment rates were very low among pensioners, single pensioners in the sample were more than twice as likely to report a missed payment (2.6%) than pensioner couples (1%).

While an increasing minority of households are experiencing severe enough financial difficulty to miss payments, a majority are having to make adjustments of some sort to cover their essential spending. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. Nearly eight in ten (79%) of single parents in our sample reported having made at least one such adjustment to cover essential spending in the last month, as did 74% of couples with children surveyed. This compares to 62% among the sample as a whole.  Mirroring the pattern with missed payments, working age adults without children were less likely than those with children to have made an adjustment, whilst pensioners were least likely. 

With prices rising so rapidly across a range of sectors, it is increasingly important for households to have a financial buffer to cover increases in living costs as they happen. We asked consumers how their household would pay an unexpected but necessary bill of £300. Parents were more likely to say that they could not pay this bill (15%) compared to the sample as a whole (9%). They were also much less likely to say they could pay this bill with their own money and without making an adjustment such as cutting back or using savings or credit. Only 18% of parents said they could do this compared to 43% of pensioners. 

Parents are more likely to be taking extreme action to offset rising costs

The particularly acute impact on families with dependent children goes beyond indicators of financial difficulty and impacts on behaviour too. Single parent households in our survey were most likely to report having skipped meals in response to increased food prices (31%), compared to the sample as a whole (14%).  For parents in couples, the figure was very similar to the overall average (15%). For both working age adults without children and pensioners, those who were single were more likely to report skipping meals than couples, as with parents. 4% of pensioners in couples reported having skipped meals in response to rising food prices, compared to 12% of single pensioners. 

Parents in our survey were also more likely than other household types to report having used a food bank, at 5% of parents in a couple and 8% of single parents. This compares to 3% in the sample as a whole.

The increased likelihood of skipping meals and using food banks among households with children demonstrates the extreme pressure that many parents are under, and the choices they are having to make to keep afloat. Parents described the impact this has had on them. 

"I can’t afford to do anything other than pay bills and can barely feed my children some weeks. I walk around the supermarket adding up what I spend" - Female, 43, North West

"I’m not eating properly so that I have enough money to feed & clothe my kids and still have enough to put in my electricity meter...I don't know what I will do once it gets cold… I worry about this daily while trying to make sure my kids are eating as healthy as possible which is hard when you're on a small budget" - Female, 34, Scotland

Conclusion

Our analysis demonstrates the huge impact of the cost of living crisis, and the particular challenges it presents for families with children, especially single parents.  As prices continue to rise, the winter months will inevitably cause increasing pressure for households, and our analysis reveals some of the groups who may need additional support to keep afloat.